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On July 24, 2012, Chief ALJ Charles E. Bullock issued the public version (dated June 20, 2012) of the Initial Determination (“ID”) finding no Section 337 violation in Certain Automated Media Library Devices (Inv. No. 337-TA-746). Due to the size of the ID, we have separated the file into part 1, part 2, and part 3.

By way of background, the Complainant in this matter is Overland Storage, Inc. (“Overland”) and the Respondents are BDT AG, BDT-Solutions GmbH & Co. KG, BDT Products, Inc., BDT Automation Technology (Zhuhai FTZ) Co., Ltd., and BDT de México, S. de R.L. de C.V. (collectively, “BDT”).

As summarized in our June 21, 2012 post, ALJ Bullock determined that there is no violation of Section 337 by BDT in this investigation with respect to U.S. Patent Nos. 6,328,766 (the ‘766 patent) and 6,353,581 (the ‘581 patent). The subject matter of these patents is directed to automated media library devices, also known as tape libraries. Specifically, ALJ Bullock determined that (i) certain claims of the ‘766 and ‘581 patents are not infringed by BDT; (ii) the patents are valid; and (iii) a domestic industry in the United States exists that practices the ‘766 patent, but does not exist that practices the ‘581 patent. We now provide additional details.

The ‘766 Patent

Infringement: As BDT was only accused of indirect infringement, the ALJ first analyzed whether or not BDT’s customers would be liable for direct infringement, determining that certain IBM and Dell products directly infringe claims of the ‘766 patent both literally and under the doctrine of equivalents. However, the ALJ found that Overland failed to prove that BDT knowingly induced infringement. Specifically, ALJ Bullock noted that Overland’s evidence was “unclear and remains unexplained” and thus was insufficient. The ALJ determined that BDT was not liable for contributory infringement for the same reason; namely, that Overland failed to prove that BDT had the requisite knowledge.

Validity: BDT argued that the ‘766 patent was invalid as anticipated by and/or obvious over five IBM products and their related documents. Overland’s position was that the products were irrelevant, and that the documents did not qualify as “printed publications” and thus could not constitute prior art. The ALJ agreed with Overland that BDT did not prove by clear and convincing evidence that the documents were accessible, noting that “reading a date off of a document does not amount to clear and convincing evidence of publication.” ALJ Bullock also found that BDT’s “cursory assertions and conclusory arguments” were insufficient to support using the IBM products for a rejection based on public use or knowledge. Furthermore, although the ALJ agreed that BDT provided proof that some IBM tape libraries were sold more than one year prior to filing the ‘766 patent, these products were not found to meet all the limitations of the claims, and thus the ‘766 patent was not anticipated. The ALJ determined that BDT failed to provide clear and convincing evidence of invalidity on any other ground as well.

Domestic Industry: BDT argued as a defense that Overland’s products have the same functionality as BDT’s accused products, and, maintaining the position that BDT’s products do not infringe the claims, Overland must fail to meet the technical prong of the domestic industry requirement. The ALJ was not persuaded by this line of argument, stating that BDT “do[es] not seriously dispute that the technical prong of the domestic industry analysis has been satisfied” and determining that Overland meets the technical prong. The ALJ also determined that Overland met the economic prong of the domestic industry requirement based largely on Overland’s investments in plants and equipment to produce the products that practice the elements of the ‘766 patent.

The ‘581 Patent

Infringement: The ALJ carried out a term-by-term analysis in order to determine whether or not the accused BDT products infringed the ‘581 patent. The ALJ determined that the elements of the “linear array” and “manually moveable towards said door” were not met by the BDT products, either literally or under the doctrine of equivalents. Thus, it was determined that there was no direct infringement, and consequently, no indirect infringement, of the ‘581 patent.

Validity: BDT argued that the ‘581 patent was anticipated by and/or obvious in view of certain pieces of prior art. However, the ALJ found that several elements related to the “linear array” were not taught by the alleged prior art, and thus, the ‘581 patent was not found to be anticipated or obvious.

Domestic Industry: BDT did not make an argument relating to whether or not Overland met the technical prong of the domestic industry requirement in relation to the ‘581 patent. However, the ALJ did not agree with Overland’s conclusion that it was “undisputed” that the technical prong was met. Rather, the ALJ determined that Overland failed to show by a preponderance of the evidence that it satisfied the technical prong by its attempts to incorporate by reference it’s expert’s testimony and analysis. ALJ Bullock called this tactic “nothing more than an improper attempt to circumvent the page limitations set…for post-hearing briefs” and thus insufficient. Furthermore, the ALJ determined that the economic prong of the domestic industry requirement was not met for the ‘581 patent.

Remedy and Bond

In the event that the ITC finds a violation of Section 337, ALJ Bullock recommended that the ITC issue a limited exclusion order, but noting that “components thereof” of the library devices should not be excluded as these components were not mentioned in the Notice of Investigation. The ALJ recommended that no cease and desist order was necessary, but that a bond be set.

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